Cost of Business School

Admit it: In today’s online world, we just can’t peel ourselves away from top-10 lists of anything! And the world of MBA admissions is certainly no exception. Schools and applicants alike are obsessed with rankings.

In our opinion, the U.S. News & World Report ranking of business schools is the “best” in terms of ranking schools by selectivity in admissions and their reputations in the marketplace. Quite honestly, most MBA candidates are looking for an environment where they’ll be surrounded by incredible peers and where they’ll get the best job upon graduation, so we believe it’s a very good ranking method.

You’ll hear some admissions “gurus” tell people to ignore rankings altogether, but at Veritas Prep, we see an important role for them. If you understand the methodology used behind the rankings, then they can be a helpful first step in your MBA research process. The problems lie when rankings become your first and only step in selecting target schools!

The biggest headline to come out of the 2018 U.S. News & World Report survey of business schools is that perennial powerhouse, Stanford Graduate School of Business, has dropped from #1 to #4 this year. Stanford remains the most selective business school in the world, with an admissions rate of just 6% and an average GMAT score of 733 last year (and the Class of 2018 has a record-breaking 737 GMAT score average!). The average salary and bonus for Stanford MBA graduates is a whopping $153,553 – essentially the same as Harvard’s and just $2K behind Wharton’s. So what happened?!?

Employment is Stanford’s downfall

Stanford’s drop in this year’s rankings was due to two statistics that carry significant weight in the U.S. News Ranking: percentage of students with jobs at graduation and percentage of students with jobs three months after graduation. By all objective measures, Stanford’s performance in this area is abysmal: just 63% of GSB students had jobs at graduation last year, and only 82% were employed three months out. Compare that to the Tuck School at Dartmouth, where 87% of graduates already had a job lined up when they received their diplomas, and 96% had jobs within three months! In fact, Stanford ranks #74 when it comes to jobs at graduation. But, there’s more to the story….

Stanford graduates aren’t just “looking for a job”

The #1 priority of students at most MBA programs is to have a job once they graduate. During my time at Kellogg, for example, job offers were always greeted with the greatest celebration and the lack of them caused the greatest stress among my colleagues. One’s entire 2nd year might be dedicated to the pursuit of a job offer. However, Stanford GSB students tend to be different than just about anybody else – they aren’t just looking for a job; they’re looking to change the world…TODAY. “Pursue your dreams” is a mantra drilled into Stanford MBAs from the moment they step onto its Spanish Colonial-inspired campus.

As a result, in our analysis, we’ve found that fewer Stanford students are looking for “traditional” post-MBA jobs than at any other top-tier institution. It has the highest percentage of students who pursue their own entrepreneurial ventures upon graduation, although these students who report that they are starting their own business do not impact the school’s reported employment statistics.

In addition, more Stanford grads are willing to be patient to find just the right position to enable them to make a big impact in their chosen profession, industry, society, or the world. Armed with a Stanford MBA, they recognize that they can get a job eventually, so they tend not to worry about whether that’s before graduation or several months after.

In short, the U.S. News statistics expose a growing trend at Stanford to be extremely picky when it comes to job offers. However, it doesn’t properly capture what U.S. News is trying to show through the data, which is the availability of job opportunities for graduates of each program. Stanford grads have at least as many job opportunities as graduates from any other global MBA program, so this drop in the rankings should not deter any candidate from applying.

ASU Carey jumps 10 spots after offering free tuition

In our opinion, the biggest news from this year’s U.S. News rankings comes from Arizona State’s W.P. Carey School of Business. Jumping 10 spots in one year, Carey has landed a spot in the top-25 for the first time ever. Outside of the top-25, it’s not entirely uncommon for a school to jump or slide 10 or more spots in one year, but this news comes on the heels of some major innovations at the Carey MBA program.

Most notably, the school announced in 2015 that it would make its full-time MBA program tuition-free for 100% of students. As you can imagine, the prospect of free tuition sent applicants in droves to the school, driving down its admission rate to just 14% – this makes Carey one of the most selective MBA programs in the country, ahead of Wharton, Kellogg, Tuck, and Booth.

The school’s admissions stats, such as average GMAT and GPA, improved dramatically, as did it’s yield—71% of admitted applicants chose to attend, far stronger than most top MBA programs. It’s employment statistics are equally impressive, with 79% of students landing a job before they don their graduation caps and robes, and 95% securing work within three months. Not bad!

Arizona State University grabbed the #1 spot in the U.S. News’ 2018 ranking of the nation’s most innovative colleges and universities (Stanford is #2 and MIT is #3). Before we learned of Carey’s parent institution’s honor in the ranking, Veritas Prep had also dubbed ASU’s business school as the most innovative, as not only did the school drop its tuition for the full-time MBA program, but it also merged with Thunderbird School of Global Management, long known as the top international business school in the world (though it had struggled in recent years).

Additionally, Carey’s online MBA program is one of the nation’s top online schools, and the university continues to expand its online offerings. While we wouldn’t be surprised if the offer of free tuition doesn’t last more than a couple of years, we believe ASU’s Carey School is the up-and-coming business school to watch.

What do you think of the 2018 MBA rankings? Let us know in the comments below!

Travis Morgan is the Director of Admissions Consulting for Veritas Prep and earned his MBA with distinction from the Kellogg School of Management at Northwestern University. He served in the Kellogg Student Admissions Office, Alumni Admissions Organization and Diversity & Inclusion Council, among several other posts. Travis joined Veritas Prep as an admissions consultant and GMAT instructor, and he was named Worldwide Instructor of the Year in 2011.

AIGAC (the Association of International Graduate Admissions Consultants) presented insights from its survey of recent MBA applicants and graduates at their annual conference last month. On your own business school application journey, knowing the trends below may help you know what your peers are thinking and better inform your choices:

Let’s look at some of the most interesting findings this study presented:

School Selections Impacted by Cost-Consciousness
41% of MBA applicants in this study indicated that affordability affected their final school choices, while 21% factored program cost and access to financial aid into creating their lists of target schools.

Related to this, applicants this year showed more of an openness to business school options other than the traditional two-year MBA program than they had in the past. This could be because these options reduce opportunity costs of the time away from employment prospects. The study also showed applicants’ interest in shorter full-time MBA programs (less than 2 years) jumped significantly from 33% in 2015 to 40% in 2016.

Reputation (Ranking) Still Matters Most
Although affordability has become an increasingly considered factor in the application process – with 30% of survey respondents including net costs in their school evaluations – an MBA program’s ranking is still the most influential aspect in deciding where to apply, with 74% of respondents factoring this into their school choice.

Other major school factors applicants considered in the application process were impact on career (48%), city/geographic location of the program (46%), and school culture (38%).

Optimism on Post-MBA Career
MBA applicants remained optimistic with their post-MBA prospects this year, with 41% of respondents expecting salary increases of greater than 50% within 6 months after completing their business school education.

The most popular post-MBA target career paths for applicants remain Consulting, Finance/Accounting, and Technology. The AIGAC report also shared actual post-MBA career trends, which showed a declining number of graduates going into Finance (from 43% in 2007 to 29% in 2013), while those going into Technology more than doubled (from 8% in 2007 to 17% in 2013).

Engaging Help for the Competitive Application Process
Realizing how competitive the MBA application process is, many applicants are tapping multiple sources of support. Top support systems are friends (44%), professional admissions consultants (39%), and family (30%). Only 17% of applicants reported going through the entire process with help from “no one”.

These findings show that applicants are realizing the benefits of gaining additional business school insights and wider perspectives as they compete for the coveted spots at the top MBA programs. Although the decision of where to ultimately pursue your MBA should, of course, be your own, hopefully this information can better inform your application process and help you determine some factors to consider when choosing a business school.